Do You Need a Financial Advisor?
Experience
You have a job. Even if you aren't working now, you have a profession. Let me ask you this one question. How many websites would someone have to read before you allowed them to take over your most important project?
Let me ask a different way. Suppose you own a nice piece of land. You want to build your dream house on it. Doing so will cost your life savings. Would you hire an architect who never designed a house before? What if he read twenty websites a day about architecture? What if he watched three hours of television shows about architecture every day? What if he had a friend, brother, father who was an architect? What if he studied architecture in college and wrote about it every week for the New York Times? Still not sold? Why not? Experience matters.
No matter how much you study, no matter how many books you read, nothing substitutes for experience. That is why doctors not only have to go to eight years of college, they also have to do an internship and a residency where they are slowly but surely build up experience to make life and death decisions.
So why is it that so many people think they are experts on finance after reading a few websites, or watching MSNBC, or reading a finance book? Why is it that the so called experts on finance are not financial professionals but rather professional journalists? Your retirement nest egg will be the biggest amount of money you ever see. More than ever, doing the wrong things while you build it, and while you use it can cost you big. Is this really somewhere you want to be winging it based on something you read somewhere?
An experienced financial planner knows that most people spend too much the first year they retire. They'll not only give you a general warning, they'll tell you what to look for and maybe give you some guidelines. "Congratulations. You deserve to take that trip to Greece you've always wanted. Make sure to keep the length at around a week. You aren't used to long trips yet. You can get a feel for international travel first. Oh, and make sure it only costs $X up front because most people end up spending $X per day while there."
This advice can be the difference between the retirement you've always dreamed about, and an emergency belt tightening next year when you realize how much money you've gone through.
Before you retire, the experience comes through when you make a phone call because the market is down, or because you heard about the recession. (Getting these calls right now.) Not only has your advisor seen this before, he's gotten the same phone call before, maybe from you! It's one thing to read about buy and hold and being calm and having a lot of years to make up any losses. It's harder to actually do it. A calm trusted voice on the other end of the phone may be just the pause you need to make the right decision instead of moving everything into the Stable Value Fund.
